CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider (Saxo Bank). You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.
8 June 2016
I have been asked to explain why, I, a New Zealander by birth, does not feel that the United Kingdom of Great Britain and Northern Ireland should join that other great Union – the European Union.
Now I have deliberately said “join” because although the UK is already a member of the European Union, I think it is fair to say that it has, at times, been a reluctant member. From the date it first joined, until today, there have been many occasions the UK has called into question its membership. If the collective decision, that is the will of the people of the United Kingdom post this 23 June referendum is to remain a member, I feel that it will be necessary to embrace all that being a member of a collective, entails.
While it was fit and proper to join the European Economic Community’s Common Market in 1973 – today’s European Union is a much different and bigger beast – which I am not sure that even Harold Wilson would be so keen to join? By retaining its membership the continuing questions of UK sovereign will, I feel, remain. How much of the UK legislative agenda will be driven by the requirement to embrace, in UK law, the collective view of the Union? Will our own Supreme Court be subordinate to the European Court of Justice?
The EU of today is involved in so much more than simply opening up trade borders. It has its own Foreign Affairs department head up at one stage by UK’s Baroness Ashton, someone who had never held an elected position nor had any foreign affair experience before her appointment as the EU Foreign Minister – but that’s the EU for you. Actually, it was our own Prime Minister who attempted to veto the unelected appointed of the head of the EU a few years ago. A position that comes with a personal motorcade of five limousines – several more than the UK Prime Minister and that other union head – the President of the United States. Why one individual needs so many cars is beyond me – perhaps these European-engineered cars aren’t that reliable? The salary isn’t bad either – 300 thousand euros. Sadly this was yet another EU position that the UK had to back down on. An all too familiar theme, during our membership – notwithstanding Margaret Thatcher’s altogether much more forceful negotiating stance.
The EU has its own currency, the Euro, although that was another sticking point with the UK membership. Its 500 Euro banknote has been the preferred note for criminals and drugs dealers. The rationale for requiring such a large bank note has I feel never really been explained – perhaps because of the usefulness of it when avoiding tax and moving cash to another country. Of course, the UK has successfully held onto the pound but equally had to contribute significantly to other European countries when they spent more than they earned. It seems only a short time ago we were talking about Greece having to leave the EU – but the EU is excellent at redistributing wealth without having to face up to past failings.
Now I could discuss all the economists who say leaving would be a wrong decision. Then I could outline all the economists who say it would be an economically sound decision. But honestly who’s right and who’s wrong? As all financial advertising tells you – `past performance is no indication of future performance`. I also won’t be singing Ode to Joy in German as ex London Mayor Boris Johnson recently did to counter the arguments that voting to leave makes you anti-European. The debate is really a bit like the Hokey Cokey – should we be in, should we be out, in, out, shake it all about. That’s what it all about “Hey”!
I head up the Compliance function at CSS Investments. I have been working in compliance for a number of years as the grey hairs on my head testify to. When I started out the firms I worked for were regulated by an organisation called IMRO or the Investment Management Regulatory Organisation – one thing I have learnt is that regulators love acronyms! – The rule book which firms had to comply with was a slim 2 volume folder. The EU – with its good intent to harmonise the rules for dealing in securities across Europe required countries within the community to implement the Market in Financial Instruments Directive or MiFID for short – I told you regulators like their acronyms! – the 2 volume rulebook expanded into over 12 and counting and my career has never looked back!
Now, what can a kiwi from a little island in the Pacific tell you about now to vote on such an important issue? Actually, we were one of the first countries to vote on a union. Over one hundred years ago we had to decide whether or not to join the other sovereign states of New South Wales, Victoria, Queensland, Tasmania and South Australia, to create the “United States of Australia” or just simply Australia as we know it today. New Zealand actually decided not to join this union – although this did not stop Australia from including New Zealand in the preamble to their constitution in which it still states “the states shall mean such of the colonies of New South Wales, New Zealand, Queensland, Tasmania, Victoria, Western Australia etc.” But that’s typical of Australian for you.
Has not being part of the Australia Union held New Zealand back? I can answer that in one word, well two really, “All Blacks”! If a little country of 4 million people, 70 million sheep, and a land mass the size of the United Kingdom can hold its own on the world stage, surely the UK with a population 64 million (but admittedly only 23 million sheep) can do likewise – rugby aside.
The biggest impact that joining an economic union had in New Zealand was when the UK decided to abandon its Empire and Commonwealth allies and join the EEC. It had a dramatic impact on the New Zealand economy. But the NZ economy moved on; different trading relationships were forged and the country has continued to prosper.
Naturally any change and uncertainty is unsettling. But I fail to see how leaving this union will cause Armageddon to the United Kingdom. I am sure trade between the two blocks will continue. Germany will continue to want to sell its cars to the UK, the French its wine, the Italians its salami’s, Belgium, its chocolates, and the UK will still get to sell its Weetabix to however can stomach them in Europe. And relax, Lidl and Ikea I am sure will continue to operate their stores within the UK.
Our armed forces will continue to operate collectively with other European forces under Nato – however, no word of the EU desire to have its own military task force. The Police and the intelligence communities’ will I am sure continue to share intelligence – the dangers facing both communities will be too strong for this to be ignored in some sort of tit-for-tat escalation. The world as we know it will not come to an end – despite what some commentators, politicians, and doomsayers may claim. Europe has survived two cataclysmic conflicts – I am sure leaving the EU cannot be any more traumatic – can it?
Of course, there will be change as indeed there has been with the original EEC. The question is whether we want to continue to support with our taxes that EU juggernaut that continues to operate from both Strasbourg and Brussels, at an estimated cost of 200 million euros. The millions of UK tax pounds spent to support these European institutions could, I feel, be better spent on our hospitals and schools as opposed to the EU leader’s five limousines.
…And as for the claim that the EU has stopped future European conflicts – as someone whose ancestors fought in Gaillopi, in the trenches in France, the battlefields in North Africa and Italy – conflicts started by politicians – I am sure it has been the opportunities for discussion whether as part of the United Nations, as a permanent member of the Security Council, being part of Nato, or part of the World Trade Organisation,– that collectively have kept Europe free from conflict.
Of course deciding to leave any partnership can be painful. In the short-term of course, there will be pain, however there will also be opportunities for new partnerships – so much easier when you are free and single. In this, Her Majesty’s 90 Birthday what better way of embracing the Commonwealth by redefining once again the trading links there were once part of the Great British Empire.
Finally, I do know one of two things about referendums. Some of you may recall that New Zealand had its own vote on its flag referendum several months ago – whether to continue flying its traditional flag – with the Union flag in the top left corner. The people of New Zealand vote to stay with the status quo however after the 23rd June will they have to contemplate changing it to incorporate the EU flag?
So come the 23rd June – think not about the present but the future whether this island nation would be better served by being an independent partner with Europe and the world or alternatively whether it is prepared to embrace in full – all that is entailed in being a commitment member of the European Union – for better or worse, for richer or poorer, in sickness and in health, until death or economic Armageddon they do part?